The multi-year legal struggle between upstart Internet radio operators and record companies over music royalties kicked off anew Thursday, when the U.S. Copyright Office issued an order that could send the combatants back before an arbitration panel.

Web radio operators and music industry representatives must brief the Copyright Office by March 5 on their efforts to hammer out a compromise on royalty payments. If the negotiations are unsuccessful, the Copyright Office will restart the process to establish the royalties that "webcasters" must pay to artists and record labels.

The outcome of the debate -- which is slated to come before arbitrators in August if no agreement is reached -- could determine whether online radio has a future, observers said.

The royalty debate has been down this road before. Just last year, arbitrators capped more than three years of wrangling by setting a per-song royalty rate for webcasters.

That rate -- which was adjusted and approved by the Library of Congress -- expired at the end of 2002. Neither side was pleased with the rate, and representatives from both said they wanted a private settlement so they could avoid another arbitration round.

But record companies and Internet radio stations disagree on what constitutes a "reasonable" royalty rate, and members from both camps are gearing up to plead their cases to the arbitrators, anticipating that the private negotiations might fail.

Jonathan Lamy, spokesman for the Recording Industry Association of America (RIAA), said record companies are optimistic that they can reach private agreements.

"We are still in the process of private negotiations and hope that those will bear fruit so we can avoid" arbitration, he said.

Kevin Shively, vice president of business affairs at online classical radio station Beethoven.com, said that the record companies "still are holding onto positions that would potentially bankrupt the industry."

Congress in the 1998 Digital Millennium Copyright Act said that webcasters must pay royalties to record companies and musicians, on top of the royalties they already paid to songwriters and music publishers.

Broadcast radio stations must pay the publisher and songwriter royalty, but are exempt from paying royalties to record companies and artists.

Setting the royalty rates falls to Copyright Arbitration Royalty Panels (CARP), which are supervised by the Copyright Office, staffed by private-sector arbitrators and funded by the affected parties -- in this case, webcasters and record companies.

Smaller webcasters complained during the last arbitration session that they were largely excluded from the process because they could not afford the arbitrators' fees.

"We've already filed our notice to participate, but the challenge is the $300,000-plus to even sit at the table," said Webcasters Alliance President Ann Gabriel.

The alliance, which represents nearly 300 small and mid-sized webcasters, will push Congress to reform the arbitration process, Gabriel said.

"Everyone we've talked to has been very receptive," she added.

Digital Media Association Executive Director Jonathan Potter said he hopes that the webcasters and recording industry can negotiate a deal without having to resort to arbitration.

"I expect that negotiations will resume at some point," Potter said. "We got to the end of the last CARP, nobody was happy with the result and everybody spent a lot of money. I hope people's self-interest will kick in," he said.

Potter, who represents many larger webcasters, said that his industry would not cave to what he called unreasonable record industry demands.

"You always try to negotiate and hope you can come to some sort of middle ground [but] webcasters are not going to give away the future in order to save a few dollars on an arbitration," Potter said.

Responding to unrest over the arbitration process, Congress late last year passed a bill allowing smaller webcasters to make less onerous royalty payment deals.

A small percentage of webcasters have taken advantage of that law, but many are still waiting to see what comes out of the still-unresolved battle over Web radio royalties.

Caray
Lieutenant Commander

Joined: Oct 17, 2002
Member#: 243
Posts: 408
Location: France

Posted:
Wed Feb 12, 2003 7:05 am Post subject: Back to the Table?

argh ! Again ?
Can't they understand that if you kill the goose you can't get any more eggs ?_________________My reality cheque bounced

Years ago (before the corporations got on the internet) files, concepts, ideas, and information were transfered freely. Those halcyon days are gone now my friends. The internet is a marketplace. A place of business. It is an accepted tool of work. the problem is that people still think EVERYTHING on the net SHOULD be free! This is ludicrus. If I buy software I expect to pay for it because it is the product of someone elses work. the same goes for music as well. Broadcast radio stations pay a 'fee' to the owners of the music for the right to broadcast that music over the air. Every time you buy a cassette tape you pay a royalty fee to the recording industry. Sot the real question is not wheath4er ther should be a fee or not. There should be a fee. We the listeners are recieving the products of thier labors.

Unfortunately, the argument does not end there. The record companies, and as major contributors to political parties they have weight on thier side, feel that the amount of those royalties should be set at a level that they feel will protect thier pocket books from harm when people steal the music on-line. I believe the price was something like $0.17 (US) per song, per listener. That is ludicrous! I may be wrong about the figures and I apologize if I am. The internet broadcasters are trying to set the royalties at a lower rate. They realize that there is no way that any but the largest corporations can survive on that rate. Using the numbers above, as of now there are 215 listeners, the current song would cost this station $36.55 (US)! If the average song length is 5:00 here (I know it is probably more than that) then that would be $438.60 (US) per hour. I am sure that is more than Jeric gets in donations a month. You would need to have a paid subscription of listeners in the thousands to afford to stream music over the internet.

I will continue to hope and pray that a more equitable agreement is reached. In the mean time we as the listeners can write to your congress persons and representatives to push for that equitable settlement. For our friends from other countries all I can say is ... Pray!_________________A little rudeness and disrespect can elevate a meaningless interaction to a battle of wills and add drama to an otherwise dull day. - Calvin -